Could prosecution laches threaten Big Pharma patent evergreening?
Zachary Silbersher
While Alice arguably wreaked havoc for the past decade on patent plaintiffs, its reach into patents asserted by brand pharma companies has been more limited. A patent appeal between Sonos and Google currently pending before the Federal Circuit is likely to test the bounds of the doctrine of prosecution laches. Sonos claims it was robbed of a $32 million jury verdict after the district court found Sonos waited too long to pursue the claims asserted at trial. Amicus briefs have poured in highlighting a policy debate over whether the doctrine should be preserved for only the most egregious cases. Could prosecution laches eventually stifle patent evergreening for pharma patents in a way that Alice never could?
Sonos v. Google
Sonos previously sued Google for patent infringement, which I previously wrote about here. The patents covered various technologies, including Sonos’ zones-scene technology. That technology allows a user to pre-program a set of speakers to play simultaneously, such as a collection of speakers used in the morning in a bedroom, bathroom and kitchen. The case went to trial, and the jury sided with Sonos and awarded it over $32 million.
After the trial, the district court threw out the jury verdict. It held that Sonos’ patents were unenforceable for prosecution laches. The patents themselves claimed priority to a provisional application filed in 2006, but the asserted claims were not added to a continuation application until 2019. By that time, Google had already launched a competing product, and Sonos had tried and failed to convince Google to take a license. In other words, according to the district court, Sonos used a pending continuation application to tailor a patent claim to a Google product already on the market.
The district court suggested that Sonos had “monkeyed around” with their patents so that they would read on Google’s products. See Case No. 24-1097, Fed. Cir., Dkt. 17 at 36 (cleaned up). The court found that Sonos unreasonably and inexcusably took 13 years before pursuing these patents. It further found that delay prejudiced Google because Sonos “let the industry develop and only then sought to extract an invention from a much earlier application that would read on an industry trend.” Sonos, Inc. v. Google LLC, No. C 20-06754-WHA (N.D. Cal.) (ECF 868 at 36).
The Federal Circuit Appeal
Unsurprisingly, Sonos appealed. The case includes unique circumstances, and it is not unlikely the Federal Circuit will issue a decision limited to the case’s facts. Yet, the appeal has also attracted amicus briefs on both sides that have smoked out an underlying policy debate regarding the scope of prosecution laches. The crux of the debate is whether prosecution laches should still be applied to ordinary continuation practice given that, after 1995, patentees can no longer intentionally use prosecution delays to extend a patent’s life.
Sonos argues that mining a patent’s specification in a continuation application, even years after the priority date for the provision application, cannot by itself amount to prosecution laches. Indeed, if newly added claims have written description support in the provisional, it should not matter if they were claimed immediately or years later because, either way, the resulting patent will expire at the same time. In the pre-1995 world, where a patent’s expiration date was keyed off of the patent’s issue date, prosecution laches was more important because patentees would intentionally delay prosecution for the purpose of extending the life of their patents. That is no longer possible under the current regime. Rather, Sonos argues that prosecution laches cannot exist where there is no unfair timewise extension of a patent’s life. Instead, the doctrine is an equitable one that should only reach egregious abuses of the patent system.
Google, by contrast, argues that prosecution laches is not—and should not—be limited to instances where the delay unfairly extended the life of patent. Rather, the doctrine requires showing only two elements, unreasonable delay and prejudice. Prejudice to third-parties can still arise even when there is no timewise extension of the patent’s life, especially when competitors invest in a product line in reliance on a patentee’s failure, over the course of several years, to stake a claim to their patent rights.
Several patent practitioners were likely confounded by the district court’s reasoning. Indeed, it has not been uncommon for patent holders to repeatedly file continuations years after the first-filed parent or provisional application. The only presumable constraint was whether written description support existed in the original application. Yet, at least some Judges on the Federal Circuit may have already signaled agreement with Google’s reasoning. Google cites to a law review article co-authored by the Honorable Kimberly A. Moore that purportedly reasons, “a patent applicant who obtains a patent in order to hold-up a mature industry may not be as concerned about the length of the exclusion right as they are about taking the industry by surprise.” See Case No. 24-1097, Fed. Cir., Dkt. 55 at 50-51.
Similarly, in 2010, the Honorable Sharon Prost penned a dissent in Cancer Research Tech. Ltd. v. Barr Laboratories, Inc., 625 F.3d 724 (Fed. Cir. 2010) that argued against requiring a showing of prejudice for prosecution laches to apply. Judge Prost suggested that requiring that the defendant make a showing of prejudice undermines the fact that prosecution laches is an equitable defense—i.e., the doctrine is historically grounded in the principle that a patentee forfeits her rights to her invention by willful or negligent delay in pursuing those rights. Indeed, the idea that delay in pursuing your rights can result in waiver of those rights, regardless of prejudice to any third-party, is one found within multiple areas of law.
One of the amicus in favor of Google, the National Retail Federation, makes another interesting point. The Supreme Court originally applied laches to reissue patents. That was codified in Section 35 U.S.C. § 251(d), which prevents broadening of a patent claim through reissue two years after issuance. Yet, under Sonos’ logic, that which could not be sought through a reissue after two years could nevertheless be claimed in a continuation application several years later—regardless of the length of the delay or prejudice to the public. This cannot be the law, argues Google’s amicus. Rather, prosecution laches is a gap-filler that works because that there is no statutory time limit on when broader subject matter can be claimed in a continuation application.
Should Big Pharma be concerned?
In 2005, the Federal Circuit held that prosecution laches requires a showing of prejudice, but a “an unreasonable and unexplained prosecution delay of six years or more raises a presumption of prejudice.” Hyatt v. Hirshfeld, 998 F.3d 1347 (2021). In other words, if a patent results from an amendment or continuation that is more than six years older than the earliest effective filing date, that could create a presumption the patent is invalid. It is easy to see how, if enforced more often, prosecution laches could pose a veritable threat to scores of patents. Some commentators have suggested this turns Section 282’s presumption of validity on its head.
A recent study suggests that, when it comes to pharmaceutical patents, Big Pharm has good reason to be concerned. The study reviewed patents covering the top 20 small molecule and biologics drugs based on revenue from around 2020. The study found that over one-third of the patents covering the top drugs had a delay of more than six years between its earliest priority date and the application filing date, presumably through continuation and divisional applications.
The study’s author suggests that the Federal Circuit’s position on prosecution laches will harm pharmaceutical innovation. When drug companies first identify a promising molecule or antibody, they typically file a patent application, but it can then take years of clinical trials and a lengthy FDA approval process before the drug hits the market. By that time, continuation applications could easily be more than six years from the original patent filing date. And yet, a Federal Circuit presumption of prejudice after six years would effectively rob these companies of the rewards of their R&D investments if their patents are at risk of being unenforceable due to prosecution laches.
On its face, this is compelling reasoning. But it overlooks how Big Pharma uses the patent system to delay entry of lower-cost generics. The earliest patent applications typically cover only the molecule itself. It is not uncommon that those patents have already expired by the time the company is resorting to its Orange Book-listed patents to bar generic entry. The patents that actually make it to court, i.e., the ones most often at stake in Hatch-Waxman lawsuits, are not continuations of the early composition-of-matter patents. Rather, they are more often continuations of patents pursued after the drug was launched or patents that were clearly not result of any substantial R&D required to launch the drug. Examples of are here, here and here.
Take the case of Corcept Pharmaceutical’s Korlym product. Teva, a generic, invested in pursuing an ANDA for Korlym. When it filed its ANDA, Korlym was protected by only two patents listed in the Orange Book. Neither patent read upon the label. Despite that, Corcept sued and then proceeded to add more and more patents to the Orange Book during the life of the Hatch-Waxman suit.
Corcept’s delay in pursuing these patents to the prejudice of Teva could, in theory, have been a basis to short-circuit Corcept’s strategy of perpetually delaying Teva’s entry by adding more patents to the Orange Book. Teva pursued an ANDA for a drug purportedly covered by only two method-of-use patents that, on their face, did not read upon Korlym’s label. Although Teva submitted its Paragraph IV certification in early 2018, the case has yet to reach a final judgment before the Federal Circuit. The two patents Corcept originally asserted against Teva were dropped from the suit long ago in lieu of the newly-added patents that Teva eventually, through years of litigation, finally defeated. One of the newly added patents, the ‘801 patent, issued from a continuation filed more than six years earlier. The district court itself was not shy about expressing its exasperation with Corcept.
Corcept’s delayed patent applications are, unfortunately, not an isolated instance. Generic pharmaceutical defendants could argue prejudice by having to defend against late-filed patents that were not even pursued until long after the brand drug was on the market. But the prejudice is not limited to the generics alone.
In the case of pharmaceuticals, the public is also prejudiced. Purchasers of pharmaceutical drugs, including in several instances individuals paying out of pocket, must continue to pay artificially-inflated monopoly prices for years even though a lower-cost generic has already been developed, approved by the FDA and is waiting to hit the market. Indeed, Judge Prost’s dissent in Cancer Research recognized the harm to drug purchasers from brand drug companies’ delay in acquiring its patents: “Congress has specifically recognized the public’s interest in obtaining affordable prescription drugs by enacting a regulatory scheme to expedite the availability of generic drugs.” See 625 F.3d 724 (Fed. Cir. 2010).
The Federal Circuit may decide Sonos’ appeal in a manner limited to its facts. Yet, the appeal may also draw out a policy debate over whether prosecution laches becomes a viable defense to protracted evergreening of pharmaceutical patents.